Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

How do I solve the past question? Special Order Total cost data follow for Greenfield Manufacturing Company, which has a normal capacity per period of

How do I solve the past question?

image text in transcribed
Special Order Total cost data follow for Greenfield Manufacturing Company, which has a normal capacity per period of 20,000 units of product that sell for $54 each. For the foreseeable future, regular sales volume should continue to equal normal capacity. Direct material $264,800 Direct labor 198,000 Variable manufacturing overhead 150,000 Fixed manufacturing overhead ( Note 1) 118,800 Selling expense (Note 2) 129,600 Administrative expense (fixed) 50,000 $911,200 Notes : 1. Beyond normal capacity, fixed overhead costs increase $4,500 for each 1,000 units or fraction thereof until a maximum capacity of 24,000 units is reached. 2. Selling expenses consist of a 10% sales commission and shipping costs of $1 per unit. Greenfield pays only one-half of the regular sales commission rates on sales amounting to $3,000 or more. Greenfield's sales manager has received a special order for 2,500 units from a large discount chain at a price of $44 each, F.O.B. factory. The controller's office has furnished the following additional cost data related to the special order: 1. Changes in the product's design will reduce direct material costs by $4 per unit. 2. Special processing will add 10% to the per-unit direct labor costs. 3. Variable overhead will continue at the same proportion of direct labor costs. 4. Other costs should not be affected. a. Present an analysis supporting a decision to accept or reject the special order. (Round computations to the nearest cent.) Differential Analysis Per Unit Total Differential revenue 110,000 Differential costs Direct material A 9.24 Direct labor 10.89 Variable manufacturing overhead 8.25 Selling: Commission 2.2 Shipping (F.O.B. factory terms) O Total variable cost A 30.58 76,450 Contribution margin from special order 33,550 Fixed cost increment: Extra cost 13,500 Profit on special order 20,050 b. What is the lowest price Greenfield could receive and still make a profit of $5,000 before income taxes on the special order? Round answer to two decimal places, if applicable. $ 38.3 X

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting For Undergraduates

Authors: James Wallace, Scott Hobson, Theodore Christensen

2nd Edition

1618533096, 9781618533098

More Books

Students also viewed these Accounting questions

Question

vou can access the data in a database is through the DBM 5 . True

Answered: 1 week ago

Question

The quality of the proposed ideas

Answered: 1 week ago

Question

The number of new ideas that emerge

Answered: 1 week ago